Forum Replies Created
Rob,
So, what we have here is a product designed to be tax-effective by maximising deductible debt (IP) vs. non-deductibe debt (PPR).
It seems such a scheme that compels a finance combo-deal in the way you mentioned is considered tax evasion.
Thanks for your comments. Do you know if such products were previously common? I’d not come across such a beast at the major lenders…
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Rob,
I sense you touch on an obscure yet important point. Can you please expand or perhaps add some links where those interested could find more info?
BTW, welcome back. I look forward to reading and learing from your posts.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi BrownBear,
There’s not a lot more I can add that I didn’t cover at the seminar, except to reinforce some of the key points.
First, in order to profit from the property market it is essential that you understand how it works.
In the recent boom, skill wasn’t necessarily needed as all real estate investments appreciated in value on the back of very strong demand. However, it is not reasonable to expect this in the short to medium turn given current market conditions and weak market sentiment.
In short, those that know how the market works can use this knowledge to form an investing position prior to the rest, and this first-mover advantage can be very valuable.
Second, once you understand the market, it’s critical to also appreciate that not all property profits are equal. Those that rely on unrealised gains derived from a long-term investing position ride the market trend, which includes periods of stagnation and decline. Such people don;t find opportunity, the stumble upon it through the sheer weight of time.
Louise Bedford once told me a saying that I feel is very true… namely that even a broken clock tells the correct time twice a day. This being the case, if you stay in the market long enough then eventually you must make money… but whether you have made money overall, or whether you have maximised your opportunities is a different matter.
I’m an advocate of matching the right strategy with the right time/market. Growth for growth and decline for decline. In this way I try to attract the right type of profit for my investing position.
This talk of profit led to the discussion about the ‘new’ 11 sec solution. Unlike the old one, this is more difficult to apply and understand because it pulls apart the gross profit ratio and presents it in a way that allows you to see the variables that influence profit via impact on purchase price.
Doing this allows you to begin using strategies that ‘makes’ a profit, rather than trying to ‘find’ a deal and relying on the existing circumstances to form the basis of your profit.
I’d encourage you to go back and work through the five examples given, taking the time to see how changes in annual rent and rent return % impact profitability.
Profiting from the revised formula requires a familiarity that doesn’t come easily. It may take a few goes until you get that ‘a-ha’, which is why you should stick at it.
If you continue to have trouble then rebook for the next one as it might make more sense the second time around.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Domo,
Here’s the link:
https://www.propertyinvesting.com/forum/topic/8788.html
Please discuss future matters on that thread.
Thanks,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Thanks for the suggestion!
Maybe I could turn all the FAQs into a third book… think of the royalties [wink4]
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Aussie,
It’s an interesting point you make.
I notice that the last round of REIA stats had the Melbourne median house market falling by around 15%.
However, I regularly look through the local paper and see houses in Ringwood etc. sill priced at $350k+.
Sure, I think we are off the highs, and asking price is not necessarily the price you’ll get, but value shaven’t fallen by as much as I would normally expect to bring them back into the realms of affordability for the first-time buyer.
What do other people think?
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Just to add, what I also said was:
Positive cashflow is (and continues to be) the meat and potatoes of the deal. Capital gains was (and is) gravy on top.
The key is to align the way you invest with your expectation of the market. That is, growth assets for growth times, and income assets for income times. Having said that, I’m not at this point feeling like the property market is primed for another huge growth cycle just yet.
However, what is true is that I don’t wait for the opportunity to find me, I find it.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Aussie,
Thanks for your feedback. I’m delighted that you enjoyed the book, but even more so that you gained a few insights about how to improve your investing.
Warm regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi George,
Point noted – and it is with great pleasure that I start the gossip train running…
It seems that Barb and her fellow team of bird-doggers have in fact created a resource that is in the post-edit phase.
Stay tuned for more info…
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Yack,
Welcome to the forum. You have just completed a book that was relevant in 1999. The 11 second rule does not work now.I couldn’t disagree more. It’s the application has changed, the theory remains as relevant as ever.
To this day I continue to use and apply the 11 Sec. Solution as a rule of thumb to help understand the relationship between:
* purchase price
* current rent
* liklihood that it will be +ve cashflow on a buy and hold basis.Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Clearly an organisation that resorts to having to spam is not one of integrity.
I have followed this up directly with the people concerned and have received the following reply:
Dear Steve,We apologise for any inconvenience that may have been caused to yourself or any user of your website, through Annette emailing people regarding property. It is now understood that this type of behaviour is against the terms and conditions set for the website and as such will not happen again.
Sincerely
Logan BagrieRegards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi SusanJ,
Thanks for your post and welcome to the forum.
Note: I have assumed that the property came with clear title (i.e. no existing debt), and that you want to keep it rather than sell it.
The easiest way forward is to seek out a mortgage broker to help you arrange a loan for $60k. As this is only 50% of the current value, you shouldn’t have too much difficulty in sourcing funds (subject to what you earn as an income).
As MH says below… what happens next is your solicitor arranges for the title to revert to your name (rather than joint names) on an agreed date when your loan funds become available.
If it was suitable, what I would also say to your sister is not to offer 50% of the $120k, but 50% of a slightly less amount to reflect that if you had of sold it then, because of sale costs, the actual monies received would have been less than 50% of the gross $120k.
Such an adjustment / negotiation seems only fair as you shouldn’t be penalised for deciding to stay in the investment.
Now – are you keeping this property as an investment? If so, what are you hoping to get out of it in terms of income and cap growth?
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Tim,
Most of the statistical info can be gained online for a price.
For mine, the population seems a little small. So, without a niche deal or expanding infrastructure, you may find growth to be restricted.
From a cashflow point though, so long as you can mitigate the vacancy issue, then yields may be attractive.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Welcome to the forum, and thanks for reading my books.
You have picked up on:
action + reaction = momentumbut don’t forget that:
money follows managementAs such, I’d suggest trying to find a deal that looks attractive and then shop it around. Perhaps even get in touch with another bird-dog and ask them to refer it to his or her (mini cough, splutter, wink) database for a cut of the profit.
Ultimately, someone else has ‘the market’ if you can provide the right deal.
Good on ya for giving it a red hot go. It won’t be easy, but it can be done.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Just clarifying, would she get nothing because:
1. There is no equity left after sale costs; or
2. Because getting the money out of the coutry is difficult?How much money are we talking about? A little more info would provide a context for any help provided.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hey mate,
You’re more than welcome! Please report back with your decision / research / more questions.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Good book from a comprehensive sense, but just remember to distinguish fact from opinion.
A general rule is that there is opportunity in every market, and more so when times are tough.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Olivereindeer (nice alias!),
I agree with Westan, since, from my experience it is better to solve a prior spending problem than it is to seek more money.
Having said that, books such as ‘The Richest Man in Babylon’ (which are a great read) suggest that you should pay off your debts at the same time as building your wealth.
To answer your questions though:
1. What can I realistically expect to achieve in my current situation considering this debt?At least moderate results, provided you cease the behaviour that landed you in debt in the first place. It’s the old adage – to get out of a hole you first have to stop digging.
Borrowing may be difficult (given that your serviciabilty will be affected by your current debt). That leaves two choice:
1. Repay the debt
2. Establish another entity to borrow through and sign as a guarantor rather than the borrower.This second option may still prove problematic.
Honestly though, I can’t promise beer and skittles, yet if you work hard there’s no reason why you can’t win.
2. Is there anything I can start NOW to get going without any savings and having this debt?Yes – get out of debt asap, especially if the interest on your debt is non-deductible.
That is, you may find that the best use of your money (talking after-tax returns) is to repay debt, as to repay $100 of non-deductible interest you will need to earn more in gross pay.
On top of that, also start saving at least 10% of your gross income so that you have some cash to get going once your financial situation improves.
3. I want to start planning to be in a good position to purchase IP by end of 2006 when property prices are hopefully set to slump in Tas.Well, that’s a good starting point, but be more specific with your goals. For example:
* Who much cash do you want to have saved up?
* How much debt will you have owing?
* Where will you be living?
etc. etc.Finally, now or never indeed! Cease the motivation to take drastic action, as there is never a better time to get started than right now.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
There are two options to investigate about general demographics.
1. http://www.homepriceguide.com.au/index.cfm
2. http://reareports.realestate.com.au/For vacancy rates, and a range of other reports, go to:
http://www.reia.com.au/market_reports/research.asp
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Salla,
Welcome to the forum and thanks for your post.
You ask a question that must be near the front of every homeowner’s mind – namely, what to do with an asset that might be earning equity but which is not performing from a cashflow perspective.
Furthermore, approaching retirement, you no doubt sense that equity is not as ‘useful’ to fund ongoing expenses as is a regular cashflow, mainly because once spent, equity is now expired whereas cashflow is of a recurring nature.
Two important issues to weigh are:
1. Are you willing to take a lifestyle hit to rent out your home to move to ‘lesser’ accommodation?
2. How much equity should you redraw to fund other investments.
The answer to the first question is an issue of lifestyle and the way you are acustomed to living. Only you know if you can ‘downsize’ (in living) to ‘upsize’ (in income).
The second question is a matter of crunching the numbers to see how much extra interest your equity redraw would cost you to access funds to invest. This is where planning is needed as opposed to investing on a whim.
As for loopholes etc., best to see an acocuntant for the specifics, but generally your home (i.e. principal place of residence) is not taxed from a cap gains perspective, but then again, neither are the improvements generally tax deductibel either. Things change a little if you rent your property, especially if it is for an extended period of time.
Good on you for thinking about such issues, and best wishes for your new career as a property investor!
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
